FAST FLIPPING RESULTS IN HIGH TAX RATE

DEAR PATTI: I read an article on a Web site that says if you flip a property without holding title for 12 months or longer you will be taxed at 50 percent of profit. But holding longer, the tax is only 15 percent. True or false? --Puba H.

DEAR PUBA: Neither is fully correct. If you hold title to a fix-up "flipper property" or any asset less than 12 months, your sale profit will be taxed as ordinary income, just like your job salary, dividends and interest. The exact federal tax rate varies widely, depending on your income tax bracket, from a low of 10 percent up to a maximum of 35 percent, plus state tax.

However, if you hold a "flipper property" or any asset over 12 months, then your maximum federal long-term capital gain tax rate is 15 percent of your profit (plus applicable state tax). If you are in a low tax bracket, your long-term capital gain tax will be even lower than 15 percent. For full details, please consult your tax adviser like Randy Reynolds 831-438-9582